Despite underwriting profit, liability insurance yet to grow

Mumbai, Nov 29 (PTI) The domestic liability insurance market is still underdeveloped with a paltry penetration of 0.01 per cent of GDP even though underwriting profits have remained strong, says a report.

India is the sixth largest liability market in Asia with an estimated premia of USD 254 million in 2014.

Liability insurance is a part of the general insurance system of risk financing to protect the insured from the risks of liabilities imposed by lawsuits and similar claims.

Rates in the liability segment have been stable over the last couple of years with the exception of medical malpractice, where they increased by 10-20 per cent in 2014 and general liability is the biggest line of business currently here, a report by global reinsurer Swiss Re said.

Recent trends suggest that after the enactment of the new Companies Act, there has been an uptick in corporate interest in directors and officers liability cover in the country, the report said, adding in addition, more engineering, pharma and auto companies are buying product liability insurance and demand for professional indemnity is also increasing.

Even as the liability insurance market in Asia may be small currently, it is expected to offer significant growth opportunities, it said.

In 2014, liability premiums in the region were USD 12 billion, accounting for 3.8 per cent of total non-life premia in Asia and 8 per cent of global liability premia.

The liability insurance market grew by 10 per cent in Asia between 2007 and 2014, the report added.